8 top factors that will affect your logistics budget

2017-12-28

Logistics expense always take a big part in
the whole budget of a company. Allocating funds to each of the individual
functions is not an easy task. If the company is just established recently, setting
a budget is easier. However, new start-ups may face a bigger challenge as they
begin to grow their company.

Fluctuation in freight charges and
surcharges is one of the hardest factors to reconcile. Commodities such as fuel
and currency are usually revised on a quarterly basis and can work in your favor
or against. On some trade lanes,
peak-season and other surcharges apply that make predicting your future freight
costs a guessing game.

Here are the 8 top factors that will affect
your logistics budget:

Base Freight Rates –Knowing what your rates
will be for an entire year allow you to include these costs to determine your
sales price. Your base rates usually make up the bulk of the budget. If you
have a significant transportation spend, it may be wise to negotiate base rates
that are valid for 12 months.

Surcharges – All modes of transport apply
surcharges for fuel, currency and some for peak-season shipments. Fuel and
currency surcharges fluctuate often so it is difficult to predict over the
course of a year.

Local / Domestic Freight Rates – Aligning
with a few local and nationwide carriers can secure the best rates based on
your volume. If you maintain one or more in-house trucks and drivers, weighing
the cost of employee wages and vehicle maintenance / insurance against a 3PL
delivery company could produce significant savings.

Import / Export Customs Brokerage – Fixed
fees are usually offered by customs brokers to perform all declarations which
will vary based on various factors such as the number of products / HS Codes in
your shipment, additional reporting requirements, value of your shipments.

IT Investments – Supply chain software
changes frequently however most shippers exercise due diligence before
purchasing in order to make sure that the programs are useful over an extended
period of time.

Cargo Insurance – This is a proportionately
minor cost in comparison to the overall value of the shipments but depending on
the sales volume, can accumulate quickly for a thriving business.

Warehousing – Any time a company chooses to
warehouse their inventory in- house, expenses can escalate. The cost of
real-estate alone can be a deterrent and when you factor in warehouse staff,
material handling equipment and insurance costs, considering a 3PL warehouse
may see substantial cost savings in the annual budget.

In order to limit the elusiveness of
freight rates, BY56 smart logistics platform gathers many logistics platform,
which allows users to search and compare shipping rate online. BY56 logistics
mall is designed to make booking shipment as easy as booking a plane ticket for
your trip. You can do ebooking for your shipment in the price-transparent
logistics platform. No more hidden charge!

BY56 ensures you better manage your annual
logistics budget and provide insight that will help to simplify the process!